United Kingdom 16 Jan 2013

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ACCA’s long-held concerns about auditor independence, fragmentation and reduced accountability for public money have also been borne out by the Committee’s findings, which point to ‘serious gaps and concerns with audit proposals’ which, if not addressed, will lead to a weakened audit framework for public money

—John Davies, head of technical,ACCA

The report by the Local Audit Bill Ad Hoc Committee which has highlighted potential risks and gaps in the draft legislation which would result in the abolition of the Audit Commission, has been welcomed by ACCA (the Association of Chartered Certified Accountants)

The accountancy body, which has more than 15,000 members working in the public sector, has been raising concerns about the Government proposals since they were announced in August 2010 when ACCA said: 'There are a number of issues and outstanding questions that need to be addressed if we are to have a sensible, proportionate and cost effective auditing system for local public services in the future. This is critical for ensuring accountability and the stewardship of public funds.'

'Three years on, the concerns remain,' says John Davies, head of technical at ACCA, and have been reflected in the ad hoc committee’s report Pre-legislative scrutiny of the draft Local Government Audit Bill.

John Davies said: 'There are so many issues to address as highlighted in the Committee’s report that it is apparent that major surgery is needed to make the new audit framework fit for purpose, particularly in ensuring there are adequate arrangements for auditing health bodies and strengthening audit committees.

'We also had specific concerns about the quality of the impact assessment that accompanied the draft Bill, because it was wholly focused on cost, without making reference to the impact that downward fee pressures might have on audit quality. We are pleased to see the Committee is recommending the Government revisits this area. We support the Committee’s recommendation that a central procurement capacity for appointing auditors to local bodies is retained in order to deliver the best possible deal for all local authorities on audit fees. Such a capacity will also help to prevent conflicts of interest arising where a firm is seeking a local authority contract whilst delivering substantial consultancy services,' he said.

'ACCA’s long-held concerns about auditor independence, fragmentation and reduced accountability for public money have also been borne out by the Committee’s findings, which point to ‘serious gaps and concerns with audit proposals’ which, if not addressed, will lead to a weakened audit framework for public money.

'Given that the changes to the audit framework come at a time of unprecedented cuts in public services, when there needs to be strong public audit to not only reassure people that value for money is being achieved but also that there is a deterrent against fraud and corruption, ACCA urges the government to take immediate action and implement the recommendations made in the Committee’s report,' said John Davies.